Risk sentiment recovered marginally overnight which saw the USD depreciate against a basket of currencies. Adding to the mix was a number of headlines that also undermined the Greenback. The US Dollar Index (DXY) retreated by 0.09% to open this morning at 96.73. There wasn’t a lot to digest overnight but the Greenback did have some food for thought from the Fed and the headlines.
There was little on the economic calendar but there were some minor pieces to analyses. US headline core and durable goods orders were weaker than expected, further evidence of softer business investment as import tariffs take effect. Initial jobless claims also trended higher, while existing home sales rose for the first time in 7 months. Overall, the data adds to the growing body of evidence that the China import tariffs are starting to bite.
Speaking of the China tariffs, the US-China trade tensions are far from resolved. The Office of the US Trade Representative released an updated report on the investigations of China’s trade practices regarding technology transfer, intellectual property and innovation. Ultimately, the report concluded that China has not fundamentally altered its acts, policies or practices. In fact, in some cases it has regressed. The report added fuel to the fire with the much touted reconciliation looking a bridge too far.
The biggest news overnight however was that the Fed could end its cycle of interest rate hikes. According to a senior Fed source, the rate hikes could end as early as the spring as the Fed considers at least a pause on its gradual rate hikes. While the December rate hike has mostly been priced in, the news would mean much more debate on the outlook, moving into 2019.
It’s another quiet day on the economic calendar to close out the week with Thursday being on the slow side. The US also moves towards a pause on the economic news for Thanks Giving.